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Frequently Asked Questions

What is Active Trading Investments trading philosophy?                                                                                                        Can I access my account information online?                                                                                                                            How do I move money in and out of my account?                                                                                                                        Do you have account minimums?                                                                                                                                                 How do I pay my fee to Active Trading Investments?                                                                                                               What reports will I receive from Active Trading Investments?                                                                                                     How can I be sure that my assets will be safeguarded properly?                                                                                                 Do you provide references?                                                                                                                                                          What does Bullish and Bearish mean?                                                                                                                                          What is a Stock Option?                                                                                                                                                      What's a Credit Spread?                                                                                                                                                         What's an ETF?                                                                                                                                                                           What's a covered call?  


What is Active Trading Investments trading philosophy?
We employ the principles of asset allocation and diversification to construct a portfolio with a broad selection of assets classes, using a blend of stocks, ETFs and options. We screen and select these securities based on a variety of criteria including fundamental soundness, technical performance, suitability, cost, associated risk and expected probabilities.  Each account is monitored throughout each trading day.                                                                                                                Top of Page

Can I access my account information online?                                                                                                                                                                        A separate financial institution - Interactive Brokers, LLC - holds your investments in an account in your name and acts as custodian. As a result, you have the capability of logging into your account and reviewing the account statements, current and closed trades, gains and losses, etc.  You have complete control over depositing or withdrawing funds.                    Top of Page

How do I move money in and out of my account?                                                                                                                                                        Through Interactive Brokers, you can arrange to transfer funds directly between your local bank and your brokerage or IRA accounts. In this type of transfer, the funds move electronically between accounts registered to the same person. Transfers can be done via wire transfer, check and Electronic Funds Transfer (ETF).                                                                                Top of Page

Do you have account minimums?
While we do not have hard and fast minimums, our fee structure works best for clients with at least $50,000 in investable assets.    Top of Page

How do I pay my fee to Active Trading Investments?                                                                                                                                                        We deduct our fee quarterly in arrears (in January, April, July, and October) from your account. You will receive an invoice with your quarterly report. Our fee structure is detailed in our Investment Advisory Services Agreement. The advisory fee may be tax-deductible. We recommend you consult with your accountant to see if it is deductible. Please contact us if you would like a statement of our advisory fees for tax preparation.                                                                                                                        Top of Page

What reports will I receive from Active Trading Investments?                                                                                                                               Each quarter, you will receive reports that provide performance and total return information. In addition, you will electronically receive via email statements from your custodian detailing transactions in your account. Our reports complement those statements and provide a critical analysis of your investment performance. Because the quarterly reports will help you evaluate how your portfolio is performing, we encourage you to familiarize yourself with them.

Please let us know if you would like to review your reports.                                                                                                            Top of Page

How can I be sure that my assets will be safeguarded properly?                                                                                                                            Active Trading Investments uses an independent custodians (Interactive Brokers, LLC) to house your assets. This custodian provides account statements directly to you, which you can use to check against your Active Trading Investment statement. Checks for deposit are always payable to the custodian and not to Active Trading Investments. Withdrawals are made by you.    Top of Page

Do you provide references?                                                                                                                                                                                        References are available, upon request.                                                                                                                                                 Top of Page

What does Bullish and Bearish mean?
Bullish means the security or market is going up in value. Bearish means it's coming down in value.   

The easiest way to remember this is to picture how a bull and a bear fight. A bull hooks its horns upwards and a bear fights on its hind legs to crush down its opponent.                                                                                             

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What is a Stock Option?
A right for an investor to buy (call) or sell (put) a stock at an agreed-upon price within a certain period or on a specific date. For this right the investor pays (buy) or receives (sell) a premium. 

Exchange-traded options first started trading in 1973. Over the past decade, the popularity of options has grown in leaps and bounds. They have been around for more than 30 years, but options are just now starting to get the attention they deserve.

Finally, words like "risky" or "dangerous" have been incorrectly attached to options by the financial media and certain popular figures in the market. However, it is important for the individual investor to get both sides of the story before making a decision about the value of options.

Many investors have avoided options, believing them to be sophisticated and, therefore, too difficult to understand. Many more have had bad initial experiences with options because neither they nor their brokers were properly trained in how to use them. The improper use of options, like that of any powerful tool, can lead to problems.                                                         Top of Page

What's a Credit Spread?
An options strategy where a high premium option is sold and a low premium option is bought on the same underlying security, resulting in a net credit to the portfolio.

For more details see Credit Spread Example                                                                                                            Top of Page

What's an ETF?                                                                                                                                                                            An ETF (Exchange-Traded Fund) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE.  ETFs can be beneficial to investors who are short on capital or need a simple way to add diversity to a portfolio.

An ETF tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does. By owning an ETF, you get the diversification of an index fund as well as the ability to buy and sell as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order.

Perhaps the most important benefit of an ETF is the stock-like features offered. Since ETFs trade on the market, investors can carry out the same types of trades that they can with a stock.

An additional feature of ETFs is that some fund issuers offer not only bullish ETFs (an ETF that increases in value as the underlying securities increase), but also issue inverse or bearish ETFs (ETFs that increase in value as the underlying securities decrease).    Top of Page

What's a covered call?
The covered call strategy is a conservative strategy of buying a stock and selling call options against that stock. Monthly cash income is generated by selling call options against stock that you own. When selling a call option you contract the delivery of stock owned at a price (strike price) for a specific amount of time (option month). In other words, the buyer has the right to buy your stock (at the strike price), and you are paid a premium (price paid for the purchase right). This investment strategy works best in a rising market economy. Why? It helps to maximize the yield (premium) of the held stock. What's safe about options investing is that the strategy works in a declining market, too. How? Use it to minimize losses by offsetting a stock's devaluation with premium income. If you plan to hold the stock you buy or own for a long period of time, then writing covered calls (selling call options on owned stock) can greatly enhance the yield performance of your stock portfolio.                                                                         Top of Page

 

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